How to Make the Financial Planning Process Work for You

I get the unique opportunity to speak with employees taking part in our Ask-A-Planner consultation service offered through their employer as a financial wellness benefit.  Every session is unique and last week was no exception. One moment I was meeting with a recent college grad feeling overwhelmed with student loan debt and a few minutes later, I was talking with a parent trying to save for their kid’s college without overlooking their own retirement savings.  A conversation about establishing an income plan for retirement quickly transitioned to an emotional discussion about the death of a loved one and concerns about protecting one’s family through a well-crafted estate plan. 

The common thread that exists regardless of the life goals or which season of life the people that I talk with are in is the need for a financial plan.  The problem is that while almost everyone recognizes the importance of a financial plan, very few people have an actual plan in place. To do this, you need to take into account the consideration of your future vision and values as well as your current net worth situation. Here are some steps of the financial planning process along with some things you can do to solidify your plan along the journey:

1. Determine your current financial situation.  Many financial plans hit the stumbling blocks during this important first step. It can be difficult getting your personal finances organized but assessing your income, savings, expenses, and debts is the foundation of a financial plan. With two kids and a wife that is self-employed, it is hard for our family to find time to have regular financial planning talks. I may be a financial planner, but it is a whole lot more fun to take an impromptu trip to the beach, take the kids to their first drive-in movie, or read something that is not related to the financial world for a change. But I also know that I have to carve out time to work on reviewing and following a financial life plan.

Any goal worth achieving takes time and effort so take the time to organize your finances. Complete a budget and net worth spreadsheet or use account aggregation sites like or to help you see where you stand. You can also put together important protections such as estate planning documents and life insurance, disability, or long-term care policies.

2. Develop your financial goals.  When it comes to our financial lives, we all have good intentions but not everyone has well-defined goals. Take some time to visualize your financial life goals. What do you want to accomplish in the next 3 days, 3 months or 3 years?

Be Specific. Make sure they are Measureable, Attainable, Realistic, and Timely. This is why we call them SMART Goals. Remember, it’s not a plan unless you put it in writing and commit to turning goals into an action plan.

3. Identify alternative courses of action.  Important life decisions require developing a list of alternatives to make smart decisions. This step requires a review of your options and they usually fall into simple categories. Continue to follow the same path you are on, expand on your current plan, make changes to your current financial situation, or change your course completely and head in a completely different direction.

Not sure what course of action to take in your financial life? Creativity is an essential component as you explore alternatives. After you’ve assessed your financial situation and established clear goals, go ahead and brainstorm your options.  Sites such as 360 Degrees of Financial Literacy have helpful resources based on your life stage or topic areas of concern. Here are some other alternatives for common planning concerns:

5 Steps to Successful Money Management

5 Steps to Getting and Staying out of Debt

5 Steps to Education Planning

5 Steps to Retirement Planning

4. Evaluate alternatives. Look at all possible alternatives and determine how they will impact other areas of your financial plan. The hard part is when we have to prioritize our financial resources between competing goals. This is where questions such as should I save for emergencies, pay off debt, or invest for retirement become our focus.

If you are concerned about funding your child’s education, remember that you can borrow for college expenses but you don’t have that option for retirement. Weigh the pros and cons of using extra money in the budget to save, invest, or pay off debt. Run a Roth 401k vs. pre-tax 401k analysis. Estimate how long it will take to be completely debt-free by running a mortgage payoff calculator and compare it to an investment calculator…you get the idea.

5. Create and implement your financial action plan. Goals aren’t going to just magically become reality without some effort. This step is where financial plans become action plans. Start with the foundation of creating a personal spending plan, contribute up to your employer’s match in a 401k plan, build an emergency safety net, pay down high interest debt, obtain life insurance, review disability insurance needs, create a will, etc.

When you look at this sample list of potential action plans it is easy to get overwhelmed. Simplify things by choosing your top 3 priorities. Once they have been accomplished, move to the next 3 and so on. Throw in some rewards along the way to stay motivated. For example, we usually plan a family date night to celebrate the completion of our business and personal income tax returns.

6. Review and revise the financial plan. Always remember that financial planning is truly a process. Part of this process is to review and revise your plan on a regular basis. Some good guidelines are to re-balance your investments 1-2 times per year, review your insurance policies and shop coverage regularly, update your will and estate planning documents as major life events occur (birth, divorce, death of a loved one, etc.), and run a retirement calculation once a year to track your progress.

Whatever your goals may be, commit to having regular money conversations with loved ones or a significant other so there is accountability and open dialogue. Set reminders and commit to regular reviews.  Here is a sample personal finance calendar from Schwab. Just looking at the list is a great reminder that financial planning is a process and not a one time event.

Life happens all the time you are planning for it.  That is why no matter what season of life you are going through or the financial challenges or blessings you may be faced with, it is important to live in the moment and plan for the future. Notice that I didn’t say live for the moment because that is a completely different concept and one that can lead to credit card debt and bad decisions (or what I refer to as my college experience).

It can be a tough balancing act sometimes but that is where a solid financial plan can help you prioritize difficult decisions related to money. Everyone has the ability to follow these steps. If you run into some roadblocks along the way or need professional guidance, seek out a CERTIFIED FINANCIAL PLANNER™ or take advantage of a financial wellness program at work if you have one available.

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